HOUSING AND DEVELOPMENT BOARD AND HOMES IN SINGAPORE

HOMES IN SINGAPORE

Most of Singapore's people live in high-rise flats, sharing corridors and facilities. A typical married couple lives in small two-bedroom apartment, assigned by the Housing and Development Board, with cable television and modern furniture and regulation windows. A family with one child might have three bedrooms.

The state owns more than 70 percent of land in Singapore. Most of the public housing is in the form of high-rise apartments in suburbs outside the central city. Every public housing unit is like a microcosm of Singapore because law mandates that they be 75 percent Chinese, 15 percent Malay and the remainder Indian and other ethnic groups—the same ethnic make up Singapore as a whole.

Land is in short supply and real estate prices are out of sight, yet about 90 percent of all Singaporean households own their homes, mostly small government-built apartments. In 2005, AFP reported: “More than 90 percent of Singaporeans own their homes and their combined residential property assets totalled over US$200 billion at the end of 2003, the statistics department said. In a survey on the public housing when the city-state had 3.4 million citizens and permanent residents, the department said even the poorest 20 percent of Singaporean households largely own their homes. Home ownership stood at only 29 percent in 1970. At the end of 2003, about 47 percent of the assets of all households was in the form of property worth S$359 billion (US$214 billion), while financial assets totalled nearly S$408 billion. [Source: Agence France Presse, October 11, 2005]

In December 2006, The Today newspaper reported than an investor in Singapore paid $9.1 million for a 400-square-meter apartment near the business district and turned down an offer to sell it for a 19 percent profit a week later, saying he wanted more,

Government Housing in Singapore

The city-state's almost universal home ownership is the result of a scheme launched in the 1960s. About 85 percent of people in Singapore live in government housing, having bought their homes with government-mandated savings. Government high-rise public flats are administered by the government's Housing and Development Board, with mortgages financed through mandatory pension contributions from employees and their firms.

In the 1960s, when housing was in short supply it was not unusual for 50 people to squeeze into a space equal to the size of a typical American house. Families often had to go outside to do their cooking. In the 1980's new government housing was built so fast a new unit opened every 20 minutes. These days many people want to move out of their small public apartments into larger private homes.

The government heavily subsidizes services in order to make them affordable to all and sets aside 6 percent of the monthly income of each worker into a personal Medisave account, which can be used to pay hospitalization costs for any family member. The Medisave account is part of the Central Provident Fund, which is Singapore's compulsory national social security savings plan. Contribution rates due to be phased in in the early 1990s mandate a contribution of 40 percent of the gross wages of employees under fifty-five, with employee and employer sharing the burden equally. Singaporeans can use these funds to invest in approved securities, to purchase homes in government housing projects, or to pay for hospitalization and retirement. By 1990 some 88 percent of Singaporeans lived in Housing and Development Board apartments, a vast public housing and urban redevelopment project initiated in the early postwar years. Under the program, which began in earnest after independence, Singapore's slums and ethnic neighborhoods gradually were replaced with modern housing estates, self-contained units providing shopping, restaurant, and recreation facilities as well as apartments of various sizes, scattered outward from the old central city. A network of superhighways and a state-of-the-art mass rapid transit system connect Singapore's housing estates with commercial and industrial areas. [Source: Library of Congress]

Population Distribution and Housing Policies in Singapore

In the early 1950s, some 75 percent of the population lived in very crowded tenements and neighborhoods; these were usually occupied by a single ethnic group in the built-up municipality on the island's southern shore. The remaining 25 percent lived in the northern "rural" areas in settlements strung along the roads or in compact villages, known by the Malay term kampong, and usually inhabited by members of a single ethnic group. Many kampongs were squatter settlements housing wage laborers and urban peddlers. Low-cost public housing was a major goal of the ruling People's Action Party ( PAP). Vigorous efforts at slum clearance and resettlement of squatters had begun with the establishment in 1960 of the Housing and Development Board, which was granted wide powers of compulsory purchase and forced resettlement. By 1988, Housing and Development Board apartments were occupied by 88 percent of the population and 455,000 of these apartments (74 percent of all built) had been sold to tenants, who could use their pension savings from the compulsory Central Provident Fund for the downpayment. The balance was paid over twenty years with variable rate mortgage loans, the interest rate in 1987 being 3.4 percent. The government envisaged a society of homeowners and throughout the 1980s introduced various measures such as reduced downpayments and extended loan periods to permit low-income families to purchase apartments. [Source: Library of Congress *]

The massive rehousing program had many social effects. In almost every case, families regarded the move to a Housing and Development Board apartment as an improvement in their standard of living. Although high-rise apartment complexes usually are regarded as examples of crowded, high-density housing, in Singapore the apartments were much less crowded than the subdivided shophouses (combined business and residence) or squatter shacks they had replaced. Between 1954 and 1970 the average number of rooms per household increased from 0.76 to 2.15, and the average number of persons per room decreased from 4.84 to 2.52. Movement to a public housing apartment was associated with (although not the cause of) a family structure in which husband and wife jointly made important decisions, as well as with a family's perception of itself as middle class rather than working class. The government used the resettlement program to break up the ethnically exclusive communities and sought to ensure that the ethnic composition of every apartment block mirrored that of the country as a whole. Malays, Indians, and Chinese of various speech groups lived next door to each other, shared stairwells, community centers, and swimming pools, patronized the same shops, and waited for buses together. *

Although the earliest public housing complexes built in the 1960s were intended to shelter low-income families as quickly and cheaply as possible, the emphasis soon shifted to creating new communities with a range of income levels and public services. The new complexes included schools, shops, and recreation centers, along with sites on which residents could use their own resources to construct mosques, temples, or churches. The revised master plan for land use called for the creation of housing estates at the junctions of the expressways and the mass transit railroad that were to channel urban expansion out from the old city center. New towns of up to 200,000 inhabitants were to be largely self-contained and thoroughly planned communities, subdivided into neighborhoods of 4,000 to 6,000 dwelling units. In theory, the new towns would be complete communities providing employment for most residents and containing a mixture of income levels. In practice, they did not provide sufficient employment, and many residents commuted to work either in the central business district or in the heavy industrial area of Jurong in the southwestern quadrant of the island. Public transportation made the journey to the central business district short enough that many residents preferred to shop and dine there rather than at the more limited establishments in their housing estates. Thus, as in other countries that have attempted to build new towns, Singapore's new towns and housing estates have served largely as suburban residences and commuter settlements, the center of life only for the very young and the very old. *

Throughout the 1980s, the government and the Housing and Development Board made great efforts to foster a sense of community in the housing estate complexes by sponsoring education and recreation programs at community centers and setting up a range of residents' committees and town councils. The apartment complexes generally were peaceful and orderly, and the relations between residents were marked by civility and mutual tolerance. But social surveys found that few tenants regarded their apartment blocks as communities in any very meaningful sense. Residents' primary social ties were with relatives, old classmates, fellow-workers, and others of the same ethnic group, who often lived in housing complexes some distance away. In the late 1980s, families who had paid off their mortgages were free to sell their apartments, and a housing market began to develop. There were also administrative mechanisms for exchanging apartments of equivalent size and value. Residents used sales, purchases, and apartment exchanges to move closer to kin and friends who belonged to the same ethnic group. The result was a tendency toward the recreation of the ethnic communities that had been deliberately broken up in the initial resettlement. *

The government criticized the tendency toward ethnic clustering as contrary to its policy of multiracialism and in March 1989 announced measures to halt it. Although no family would be forced to move from its apartment, new rules prohibited the sale or exchange of apartments to members of other ethnic groups. Although the tendency toward ethnic resegregation apparently stemmed more from personal and pragmatic motivations than from conscious antagonism toward other ethnic groups, the government effort to halt it and to enforce ethnic quotas for apartment blocks demonstrated the continued significance of ethnicity in Singapore's society. *

Housing Development Board (HDB)

One of the government's most important roles was the oversight of land use and development. This was a particularly critical issue given the country's minute size (636 square kilometers) and one of the most densely populated countries in the world. As pressure for economic growth increased, optimization of land use became more critical. Central to the issue of land management was another statutory board, the Housing and Development Board, established in 1960. Between 1960 and 1985, the government-owned board completed more than 500,000 high-rise, high-density public housing apartments-- known as housing estates--along with their related facilities were completed. By comparison, the British colonial government's Singapore Improvement Trust had completed only 23,000 apartments in its thirty-two years of existence (1927-59). From 1974 to 1982, the Housing and Development Board built and marketed middle-income apartments, an activity which became a function of the board after 1982. [Source: Library of Congress *]

By 1988 the Housing Development Board was providing housing and related facilities for 88 percent of Singaporeans, or some 2.3 million people--a feat that has been called urban Singapore's equivalent of "land reform." Government encouragement of apartment ownership was both an economic and a "nation building" goal because individual ownership would ultimately pay for the program while giving citizens a "stake in Singapore." The board also provided estate management services and played an active role in promoting the advancement of construction technology. As one of the country's major domestic industries, housing construction served as an important economic pump primer. *

Home owners were encouraged to use their Central Provident Fund savings to pay for the apartments. The factors determining the selling prices of apartments included location, construction cost, ability of the applicants to pay, and the practical limits to government subsidies. Resettlement policies aimed at equitable payments, minimal readjustment, and real improvement in housing conditions. In social terms, attention was paid to providing an environment conducive to community living, integrating the population, preserving the traditional Asian family structure, and encouraging upward social mobility by providing opportunities for home upgrading. *

Starting with a capital expenditure of S$10 million in 1960, the Housing and Development Board's annual capital expenditures rose to about S$4 billion by 1985. The board's capital budget, with funds obtained in the form of low-interest government loans, represented 40 percent of the government's capital budget. Selling prices, rent rates, and maintenance charges were determined by the government, and the board received an annual subsidy of 1 to 2 percent of the government's main operating expenditure.

Housing Development Board (HDB) Flats

The Singapore government’s Housing Development Board (HDB) is by far Singapore’s biggest developer. It was set up in 1960, during an acute housing crisis that faced the former British colony when many residents lived in squatter settlements or overcrowded units with poor sanitation. Between 1960 and 2008, it built 900,000 flats for 85 percent of the population. During its peak, flats were completed at a rate of one ever 45 minutes and applicants had to wait several years before getting a unit.

Bernice Han of Agence France Presse wrote: “Public housing is often associated with poverty-stricken slums and other social ills but Singapore's high-rise apartment blocks built by the government are an exception. Known locally as "the heartlands," these towers dominate the urban city-state's landscape and are home to more than eight out of 10 Singaporeans. Surrounded by lush greenery, these flats are built within self-contained precincts with easy access to amenities including man-made lakes for water sports like canoeing, and parks for jogging and cycling. Some include track-and-field stadiums and swimming pools. Smaller, older HDB complexes that lack these extensive amenities still have shops or a fresh market for meat and vegetables. Schools, libraries and medical facilities complete the heartlands living experience. [Source: Bernice Han, Agence France Presse, October 7, 2008 /+\]

“In his memoirs, Singapore’s founder Lee Kuan Yew wrote that he "was convinced that if every family owned its home, the country would be more stable". Mindful of bloody racial riots that scarred Singapore in the 1960s, the HDB has sought to bolster ethnic harmony within public housing estates. Every estate has a quota for the various racial groups. Once that quota has been reached, a prospective flat buyer has to seek accommodation in another neighbourhood.

Singapore is a multi-racial country where ethnic Chinese make up about 75 percent of its resident population of 3.64 million. Ethnic Malays account for almost 14 percent and ethnic Indians about nine percent. The integration policy has helped Singapore avoid the ghettoes commonly found in other countries, Tay Kim Poh, chief executive officer of the city-state's Housing and Development Board (HDB), told AFP. "I say that this is a very successful policy because if you look around the world, there is always a tendency for the different ethnic groups to congregate among themselves." Asked if the racial quotas are, in a way, restricting the freedom of Singaporeans to live where they want, Tay said: "We do not force people out." Instead, he said, HDB has enabled people of different races and religions to live side-by-side. "That, I think, has helped us over the years to bring people together."

HDB Flats Makes Singapore 'A Nation of Homeowners'

Bernice Han of Agence France Presse wrote: “Ninety-five percent of Singaporeans living in HDB flats own them. The rest are rented out to low-income earners. "Essentially we have housed an entire nation and created a nation of homeowners,"Tay Kim Poh, chief executive officer of the city-state's Housing and Development Board (HDB), told AFP. "I have not seen an organisation or country that has achieved this level of home ownership, so we are unique."[Source: Bernice Han, Agence France Presse, October 7, 2008]

Newly-built HDB flats are priced below market levels, making them markedly more affordable than private condominiums, particularly in a market where prices have soared over the past three years. A two-bedroom condominium unit can easily cost one million dollars (US$699,000) in sought-after districts. In contrast, two- and three-bedroom flats offered by HDB last year were priced from $100,000 to $402,000 depending on their size and location. Some are near the business district and offer a sea view.

The HDB's Home Ownership Programme, created in 1964, offers various schemes to help Singaporeans buy flats, the housing agency says. This scheme in June received a United Nations award for improving transparency, accountability and responsiveness in the public service sector.
The HDB also offers housing loans at interest rates below levels charged by banks, he said. Mortgage repayments of HDB flat buyers generally make up less than 25 percent of their monthly household income, according to the housing agency. A newly-married couple planning to buy a resale HDB flat in the open market can get a grant of up to 40,000 dollars, for example, said Tay. These incentives have not come cheaply for Singapore, now one of Asia's wealthiest countries with gross domestic product per capita of S$52,994 in 2007.

With its emphasis on keeping flat prices affordable, the HDB loses money and requires government subsidies. "We are a loss-making organisation for a social purpose," Tay said with a smile. In the financial year to March, HDB received nearly $1.25 billion in government grants to cover its deficit, according to its financial statements. "If we provide homes to our people instead of renting them a home, they have a stake in the country," Tay said,

Market for HDB Flats Slows Down

By the early 2000s public housing was hitting saturation. About 90 percent are owned; only one-tenth is rented. Seah Chiang Nee wrote in The Star, “After providing homes for most of the population for 42 years, Singapore’s world-renowned public housing scheme is finding itself a little out of tune with a new generation in a poor economy. Sooner or later, demand has to slow. And it has – very sharply. The government is now revamping the whole scheme, long admired by governments east and west for giving this city the highest home ownership in the world. The revamp may bring in a bigger role for private developers. Ten years ago, the long-term plan was to have 70 percent people owning public housing, 30 percent private (current ratio 85:15). [Source: Seah Chiang Nee, The Star, March 3, 2002]

The private portion may be pushed higher than 30 percent. “Private developers can gauge market changes better than the government,” said one official. The famous long queue of applicants for HDB flats has all but disappeared. Prices for new HDB apartments have not dropped (unlike the resale market) while private condos have, thus lessening the value of the former.

Another reason is a change of preference among young Singaporeans. They prefer living in the city centre and refurbished estates with bright lights, exciting shopping and train stations. This demand is driving many first-time buyers to leave the queue (for new unloved places) to buy resale units in a choice locality. In comparison, their parents did not have this luxury of choice. They had viewed HDB as a cheap, modern roof over their heads – never mind the raw uniformity. The government couldn’t build them fast enough.

As a young reporter, I covered its world record-breaking feat of one flat every 45 minutes. I watched how HDB living moulded people’s lives that got representatives from all over the world to come and study it. In the past, building flats fast and cheap was easy because the concept was simple. But as society developed, the HDB had to cater for different needs of different people, the middle class and the poor. It also had to keep up with advancing design, technology and higher costs.

Today, singles prefer studio flats, as do retired couples whose children have moved out. All have special needs. Many don’t like to live in new estates in the suburbs. Some of these unwanted and empty blocks stand like ghostly giants at night. If the HDB were a private company, it would have to reduce prices. Despite perky designs and steady deregulation, HDB flats are still disliked for being too uniformed, restrictive and lacking sophisticated facilities that yuppies like. “No one wants to live in a numbered block – like prison cells,” exclaimed an undergraduate. For S$100,000 to S$150,000 more, professionals would rather buy a private condo with a sophisticated address, a swimming pool and security guards.

Price of Singapore’s HDB Flats Goes Up

Seah Chiang Nee wrote in The Star, “Housing Board (HDB) flats, which can be bought only by citizens and permanent residents (including many Malaysians), are becoming more expensive in the wake of rising demand. With rents in the private condos escalating – by 30 percent or more – a growing number of expatriates are moving into these public apartments, pushing up rents to a 10-year high. This is beginning to hit young professionals who are starting off in life. They usually buy a flat on the open market before they get married in order to be able to select a location they like. In some places, runaway prices have put off plans to own a resale apartment. A recent example is the couple who waited for a year to buy one at a choice site only to find that the price had gone up by a third or S$118,000 (RM269,800). [Source: Seah Chiang Nee, The Star, July 28, 2007]

Marketing executive Zubaidah Salim, 25, and her software engineer fiancé turned down an offer to buy a five-room resale HDB flat for S$349,000 (RM798,000). Now when they are ready, the price is S$467,000 (RM1.06mil). “We feel like kicking ourselves for not buying (it) last year. Resale prices are so high now that I don’t think we’re able to afford a five-room flat anymore,” she told the Straits Times. For expatriates, it’s even worse. When their private condo leases expire they have to fork out rental increases of 33 percent or more, depending on location.

Singapore is now the eighth most expensive city in Asia in terms of housing costs for expatriates, says a global human resources firm. “The owners are getting greedy. It’s really a landlord’s market right now,” said a property agent. Singapore’s residential property is facing a crunch that could worsen in the next few years under the weight of a large inflow of foreigners and a resurging economy.

About 85 percent of Singaporeans live in HDB estates, which have for decades been the government’s showcase of achievements. This has made housing costs much more bearable for its people in this land-short, high cost city. (Only citizens with a monthly household earning of S$8000 (RM18,280) or less can buy one but foreigners with PR status can purchase one on the resale market.) During most of the past decade, Singapore’s real estate has been in a state of general neglect, languishing after a 35 percent drop in the mid-90s. This recovery has raised the value of people’s assets. This is good news for Singaporeans, who have the world’s highest proportion of homeowners. Nine out of ten residents own their apartments.

There is, however, a downside for those who don’t own one. Prices of newly completed ones sold by the Housing Board have also been creeping upwards but at a controlled pace over the years. But since it is only available after a wait of several years and in places that people don’t like (many who plan marriage wish to live near their parents or workplace), they often buy one in the dearer resale market. These days, the preferred blocks closer to the city centre are offered at prices not far below those of private suburban condos.

The government is faced with a dilemma. It wants to see people’s asset values rise, but only gradually, not excessively, which could prevent young people from buying a home. The recent en bloc frenzy is seeing thousands of displaced owners seeking an alternative flat. Flush with cash, some turn to the resale HDB market, adding to the demand pressure. A three-room HDB flat was sold for a record S$675,000 (RM1.5mil); a week later another fetched S$720,000 (RM1.6mil). As a result, other sellers have generally been demanding exorbitant prices.

High Rents in Singapore

In 2007, Melissa Sim wrote in The Straits Times, “Figures released by the URA in July showed that rents are 31.2 percent higher compared to a year ago. They jumped 10.4 percent in the second quarter of this year, compared to the 7.6 percent rise in the first three months. But URA said Singapore was less expensive than cities such as Hong Kong, Tokyo, Seoul and Mumbai. [Source: Melissa Sim, The Straits Times, September 16, 2007 /*/]

Trade and Industry Minister Lim Hng Kiang said last month in Parliament that Singapore must 'maintain vigilance' over its costs, as excessive cost increases will dampen growth prospects. Data from property consultant Savills showed that rents for luxury residential apartments in prime areas in Singapore were lower than those in Hong Kong and Tokyo. Here, tenants could expect to pay $5.56 per sq ft, or $5,560 a month, for a 1,000 sq ft apartment. A similar apartment in Hong Kong would cost $6.43 psf and $6.20 psf in Tokyo. /*/

Apartment Hunting in Singapore

In 2007, Melissa Sim wrote in The Straits Times, “Standing in the yellow-tiled kitchen of a corner terrace house in Upper Bukit Timah Road, the Olivrys thought their arduous search for a home had finally ended. They had just signed a letter of intent and handed over a cheque for a month's rent to two property agents. Walking through the unit, they excitedly went through curtain choices and colour schemes for the walls. [Source: Melissa Sim, The Straits Times, September 16, 2007 /*/]

“But their happiness was shortlived. As the couple stepped out of the lush, palm-tree filled garden, a Caucasian man walked in. Another potential tenant perhaps, thought American housewife Laura Thornton-Olivry, shrugging it off. It was 10am. True enough, the agents called back three hours later. Instead of the agreed $4,300 rent, the unit was now going for $2,000 more.
The Olivrys, both in their 30s, were furious. Refusing to enter into a bidding war, they called the agent for an apartment in Upper East Coast Road that they had viewed earlier. /*/

“Good news, it was still available. At 2pm, with their nine-month-old baby in tow, they zipped across the island and reached the condominium. The moment they walked through the door, deja vu set in: 'Sorry, it's going for $2,000 more now.' A livid Mrs Thornton-Olivry asked: 'Couldn't you have picked up the phone to tell us before we came here?' 'Sorry,' came the nonchalant reply from the agent. /*/

“In a market of rapidly rising rents, trying to find a dream home can be a nightmare. In July, their landlord raised the rent of their 1,800 sq ft Jervois Road apartment from $2,400 to $7,200. 'The rent went up three times; that's just insane,' said Mr Nicolas Olivry, who is French and runs his own marketing business here. The hunt then began: At 7pm every night, he would sit at his desk and go through the newspaper classifieds, with highlighter pens in hand. /*/

“Pink for the good apartments. Blue for the average ones. Then it was another hour of non-stop calling to arrange viewings for the next day. The pair checked out apartments separately so they could cover more, Mr Olivry squeezing the viewings into his work schedule and his wife, in between baby feeds and baby naps. This went on for the better part of a month. It became even more stressful when their Filipino maid went home and baby Luca had to join his mother in the search. They covered nearly 15 apartments a week together. Racing against time to find a home before their lease ended this month, the Olivrys found that they had to lower their expectations and raise their budget. Their $3,200 budget had to climb up to $4,200 before they were shown anything near decent, they said. They were prepared to live farther from town but wanted the same living space as in their previous apartment. /*/

“Things were different in 2002. Mrs Thornton-Olivry found her first home in Singapore - a shophouse in Everton Road - during a four-hour transit in Singapore then. She was on her way from Timor Leste to Bangkok. The 3,500 sq ft house was beautifully furnished and the rent was $4,500 a month. 'It was the sort featured in magazines,' she said wistfully. Five years on and she had to settle for an unfurnished apartment that was half the size, in much poorer condition and in a less central location - for the same amount of money. Some of the apartments she saw had peeling paint and shabby kitchen equipment. One even had what Mrs Thornton-Olivry described as a 'burner' in place of a proper stove. /*/

“And if quality apartments were a rare find, well-informed housing agents were even harder to come by. Mr Olivry said agents were often clueless about the homes they were marketing, unable to answer basic questions such as the colour of floor tiles or the number of bathrooms. Some marketed homes which they had not even seen. Once, he ended up seeing the same unit twice because the second agent would not tell him the unit number until he got to the condominium.
They found their present apartment - about the same size as their previous one - in Tanjong Rhu through the classifieds three weeks ago. But Mrs Thornton-Olivry has had to say goodbye to her morning jogs in the Botanic Gardens, a 'mothers club' which meets in the Bukit Timah area and the convenience of walking to Tanglin Mall for groceries. 'Am I happy?' She paused. 'It's not as nice. But it's okay.' /*/

Property Dreams and Risks in Singapore

Seah Chiang Nee wrote in The Star, “If there’s one word that will make Singaporeans sit up, it’s “property”. During the golden era, there was hardly a conversation that did not touch on the real estate market. For most people elsewhere, a property was a home they needed to live in. For land-squeezed Singaporeans, property has been a national preoccupation, a dream about buying and selling, upgrading or just moving to places where their children could qualify for the best schools. Tens of thousands of people, from secretaries to doctors, were lining up overnight to buy private condos when they were launched. Speculators would make a few thousand dollars just by transferring options. [Source: Seah Chiang Nee, The Star, April 25, 2004 \*/]

“The price didn’t matter; what was important was signing the purchase. People made money from the bubble. Now that seemed like another era, another country. In 1996, the balloon burst.
Since then these investments have fallen by 38 percent, wiping out billions of dollars in citizens’ assets. Office property fell by half. The fervour was based on the principle of supply and demand although critics blame the government for not putting an end to the speculative run earlier.
The phenomenon had occurred elsewhere in developed cities like Tokyo, Hong Kong, Paris and Brussels, some of which had crashed even more dramatically. \*/

“The runaway market largely reflected Singapore’s rapid transformation from a Third to First World state. Its long-term fundamentals were – and still are – strong. The state has limited land despite reclamation work, while demand, which is now stagnant, is likely to resume growing in the future. How fast will depend on economic growth and stability. Because of the scarcity, the potential long-term (say 20 years) price of a private piece of property could rise 10 times, conservatively speaking. For the moment, such talk is hard to absorb. Although the economy and the stock market are recovering strongly, the property market has not followed suit. \*/

“A suburban flat averages S$650,000 at the lower end. A couple seeking one would need a combined salary of S$6500 to S$7000 a month. If they’re graduates who have worked for three years, it is within striking distance if they take a 30-year loan. The biggest obstacle to a recovery is the fear of losing quality jobs. It involves a 30-year commitment that can run into trouble if one spouse gets the pink slip. \*/

“This lack of confidence is reflected by people’s choice in public housing. They are avoiding large, four or five-room Housing Development Board (HDB) flats and going after three-room ones. Singaporeans are not taking risks. Instead of upgrading into private condos, people are opting to move into smaller subsidised flats. \*/

“There are other factors as well. One is to satisfy the demands of the younger generation to be able to buy a condo at lower prices, thus reducing the number of people seeking to migrate abroad. Secondly, Singapore wants to attract young talented foreigners to come and make this their home. This is a crucial strategy to prevent the city from falling into a long Japan-like stagnation. \*/

“Some planners are already working on a population of eight million in one or two generations’ time. That could require a whole new town planning concept with flats twice as tall. For that to happen, the republic has to attract four or five million foreigners – businessmen and professionals and their families. Relying on foreign numbers is unavoidable given the current low trend of procreation. The expansion will increase pressure on space and residential housing in the future that would make property investment at some stage a profitable venture. \*/

“The trouble is that Singaporeans are already highly leveraged on their quest in the past decade to become property owners. They bought and bought as prices rose and rose. They have spent a great deal of their earnings and old-age savings on their homes and seen their values go down.
The Monetary Authority of Singapore disclosed that almost 15 percent of housing loans were not backed by sufficient property values as at the end of September last year, due to a drop in prices.
The fall has hurt the financial position of many buyers, resulting in a rising number of mortgage sales. That is when a bank puts up a home for auction because the owner can't meet monthly loan payments. The authority said it had surveyed five major banks and found that the outstanding value of accounts in negative amounted to about S$6.4billion or 14.4 percent of outstanding housing loans. Owning a private property remains a dream but, for the short term, it has become a little faded. \*/

Singapore’s Shoebox Condos and Their Social Costs

Chiang Nee wrote in The Star, “A new trend has arrived in land-scarce Singapore and it is coined the “shoebox condo” – a tiny apartment just about the size of half a badminton court.
The Singapore government has pledged to put an end to it but private developers have
sold nearly 7000 of these flats that measure less than 500sq ft to young Singaporeans
desperate to buy a condo. They buy them either as a lifestyle choice or but more likely for economic considerations. Property prices have spiralled out of reach for most people. To developers, this is a potential goldmine if they are allowed to go on, getting a bigger bang for their investments. But with land growing scarcer, downsizing people’s homes remains a long-term certainty to accommodate the mass influx of foreigners. [Source: Seah Chiang Nee, The Star, June 16, 2012]

The trouble is that these “Mickey Mouse” homes have serious social implication for a
nation that desperately needs to get young people to procreate more. Shoebox condos may be ideal for renting out to foreigners but they are not the best way for the Singapore family and children. “People have to think hard before buying one,” advises a property agent. “If you
decide to settle down and raise a family in future, you’ll find it difficult to do so.”

They also make for a reduced quality of life and the government is trying to discourage the trend through persuasion before taking action. It may, for example, impose a special tax on these units. So far, these baby apartments have not made an appearance in Singapore’s public Housing Development Board (HDB) estates, which house 80 percent of the population.

HDB housing, too, has undergone some long-term reduction in size, but is relatively
controlled. According to official statistics quoted by a local newspaper, the average size of a
five-room flat in one estate had dropped from 103sq m in 1989 to 91sq m in 2006 – a 12 percent fall. In perspective, Singapore’s family size has shrunk even more — from 4.9 to 3.5 persons
per family — during the same period, a drop of 28 percent. As a consequence, officials say, each Singaporean actually has a larger space.

Shoebox condos are actually not a new invention. Studio apartments had long made the scene in central Singapore. The smallest recent one measuring only 24sq m (or 258sq ft) is due for completion in 2013. A brochure lists this “Mickey Mouse” unit as consisting — believe it or not — of a kitchen, a dining area, bathroom, master bedroom and a living area.

Not only has the average property size in Singapore been reduced to squeeze in more
homes, the buildings are being built higher. In central Singapore, a public residential complex known as The Pinnacle@Duxton has been built consisting of seven 50-storey connected towers. Singapore is also using more underground space. In more parts of the city, shopping
malls, train networks, civil defence shelters and pedestrian links as well as ammunition and oil storage have been built or planned.

Even discounting baby condos, which are a special breed, the average size of a normal
private apartment on the island republic has been shrinking over the years. In the 1970s, a 1700sq ft flat was considered average; today it is a luxury.

Housing Rules and Ethnicity in Singapore

In November 2011, Sam Holmes and Shibani Mahtani wrote in the Wall Street Journal, “The government has long used strict rules governing who can buy properties – though not over who can rent them – to help ensure social order and encourage racial and cultural integration.
Most of the city-state’s residences – about 80 percent — are government Housing Development Board (HDB) flats, which are Singapore’s version of public housing. Such flats can only be sold to Singaporeans or permanent residents, and are regulated by an Ethnic Integration Policy, which sets limits on the number of Chinese, Malays and Indians – Singapore’s three main ethnic groups – in each public housing block and neighborhood so as to maintain a roughly even ethnic distribution across the island.” [Source: Sam Holmes and Shibani Mahtani, Wall Street Journal, November 10, 2011 >>>]

“In 2010, HDB added newer rules that limit the number of units in a building that can be sold to some permanent residents, which includes foreigners who have met many, but not all, of the requirements to become full citizens. While discriminatory in practice, the government’s policies on ethnic integration in the public housing market have generally been accepted both locally and internationally as their broader aims are seen as working toward a greater degree of social harmony and cultural acceptance. However, these quotas and limits do not apply to either the public or private rental markets, nor for purchases of private residential units outside the HDB scheme. >>>

“The local Council of Estate Agents’ guidelines include admonitions against marketing tactics that “indicate preference for any race or religion in all advertisements, unless it is to comply with the Ethnic Integration Policy which aims to achieve a balanced ethnic mix among the various ethnic communities living in public housing estates.” However, there are no hard laws on the matter and no punishments. >>>

“Despite those guidelines, advertising considered discriminatory by some residents in both the public and private rental markets is still very visible on many property-listings websites. Property Guru says it employs a team to moderate the more than 100,000 listings on its site to check against “racist or anti-social content” that contravenes Singapore’s anti-sedition and racial harmony laws. But it still makes allowances for clients to request their preferences even when it comes to race and ethnicity. “We understand that agents have to take care of their clients’ preferences,” said a spokesperson from Property Guru, adding that if any listing is found to be racist or anti-social, agents are contacted and told to amend the information. >>>

In November 2011, Sam Holmes and Shibani Mahtani wrote in the Wall Street Journal, “In some cases, the discrimination revolves around worries about residents’ cooking styles, which sometimes rely heavily on odor-intensive oils and spices. In those instances, Property Guru suggests agents and landlords use less-divisive language to address such concerns but its policies stop short of prohibiting such ads outright. Instead of saying ‘No Indian or No Malay Allowed,’ (the ad) can be put as ‘light cooking allowed’ or ‘owner prefers (tenants) who do not do Asian cooking,” the spokesperson explained. [Source: Sam Holmes and Shibani Mahtani, Wall Street Journal, November 10, 2011 >>>]

“Even if those changes are made, though, discrimination can still occur in other ways. For example, a Canadian professional of Indian origin who works in Singapore said even landlords and agents that don’t explicitly discriminate in advertisements still do so later on in the application process. “It’s understandable if they have an issue with Indians who cook, for example, but to generalize based on just your ethnicity is unfair,” the Canadian, who chose to remain anonymous, said. The man recalled one incident in which an agent said, “but you look Indian, let me check with the landlord if Indian is okay.” >>>

“Agents will also often ask prospective tenants to provide details of their race in their rental applications. “Many times they are still willing to meet if you respond ‘Indian’ but sometimes they say ‘profile not suitable’,” he continued. Experts say that while the “market decides” on rental properties in Singapore, the government can exert moral suasion on landlords not to discriminate, though it is hard to legislate in such an area. “The issue is more an ethical one than a legal one,” said SMU’s Mr. Tan. “To be sure, such ads do work against existing efforts at racial and religious integration here in Singapore (and) also work against Singapore’s efforts to attract immigrants to live and work here.” >>>

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